People Patterns uses Behavioural Economics as a new source of advantage for innovative businesses. Email me bri@peoplepatterns.com.au to unlock the secrets of consumer behaviour for your business or follow the latest on Twitter @peoplepatterns.

Monday, October 29, 2012

LinkedIn do a lot of things well when it comes to influencing the behaviour of their market, and today I thought it worthwhile to point out one of the tricks they are using: keeping stale information fresh!

Change the number by changing how it's calculated

Every few days the number of people who have viewed my profile changes...but not necessarily because the actual number of viewers has. What do I mean? LinkedIn cleverly update the count of viewers by changing the time period over which the viewers have been counted. Where today I may have been viewed by '6 people over the last 3 days', tomorrow I might see that I have been viewed by '10 people over the last 7 days'.

Is this important? You betcha! It keeps my interest because the number looks different and so I feel compelled to click through to see what's changed. This interest keeps me engaged with LinkedIn both emotionally and transactionally, in other words, I don't just clock the number, I click through (where they then try to upgrade me to premium).

What's the behavioural technique?

This is the same tool that can be used to make mortgage payments or car finance seem less scary. For instance, you may have seen car ads like this Lexus example that diminishes the purchase price by promoting a weekly repayment instead.

What trick are they using? It's called Denominator Neglect, where we focus on the numerator (ie the thing that we are getting like 'viewers') rather than how it's calculated (ie over how many days). Like a muffin, it's what's on top that counts!

Lessons for your business

Three lessons from what we've covered.1. Your buyer is most likely to be persuaded by the numerator rather than the denominator, so consider how you can best utilise this in pricing,2. Don't underestimate the benefit of putting a new spin on some otherwise unchanged statistic because it may reengage your audience and3. Make sure that you are improving the life of your buyer with any of these tactics because influence is about win/win whereas manipulation is win/lose and a fast track to failure. PS Why not join the People Patterns mailing list? Every month you'll receive a short wrap-up of behavioural tips for business. Click here for the 20 second sign-up.

Monday, October 22, 2012

I sat in a seminar last week on team development and it's prompted me to think about how behavioural economics can be used to improve team performance.

The presenter started by sharing the characteristics of high performance teams, citing the 2012 AFL premiers the Sydney Swans as an example. What elements of team dynamics were called out? Process, shared vision and values, playing for each other, clarity about the contribution each individual was expected to make and so on. People in the room had no trouble listing these elements, and yet we seem collectively to struggle on a day to day, hour by hour, decision by decision basis to make it happen.

Perhaps I'm jaded, but there seems to be an intractable disconnect between high performance teams and the rest of the world. For every Sydney Swans there is a Port Adelaide. Where the Swans are the exception, the rest of us are the rule. And in spite of team dynamics being one of the most studied and trained aspects of organisational performance, an area we spend a fortune on, we scratch our heads and mutter "if only".

So what's breaking down?Insights are fleeting, behaviour is entrenched
There's no doubt that team profiling tools and team building sessions can improve performance. It's the sustainability of that performance that is at issue.

In a previous life when I facilitated induction days and team building events, and in other lives where I've participated, I've seen light globes go off. People gain insights into their colleagues and the walls get broken down between right-brainers and left, between introverts and non, between instigators and concluders. The team members see why they approach issues from a particular perspective and with that, develop an understanding of how their colleagues may see things differently. Finally! We have a shared understanding and common language that means 'conflict' is not necessarily personal, it's simply a function of us not being empathetic. Hurrah, at last we can be a high performance team!

But then something happens.

It's called habit. We revert to old patterns of behaviour and as the weeks go by, we forget that Jo is a right-brain, introverted, polkadotted, instigator and we just think Jo is an idiot.

How can behavioural economics help?
The core reason that team training fails to deliver sustainable performance is down to behavioural change. And for effective behavioural change, you need to understand human decision making and for that, there is behavioural economics.

Here is a taster of where behavioural economics can explain the breakdown of behavioural change.

We are more motivated to avoid loss than seek gain. The gain in this situation is that if everyone performs, we become a high performance unit. But that's not enough on a day to day basis to keep people behaving differently. Why? Because of what I have to lose. Change means I have to give up what I'm used to (loss aversion), it requires more thinking and self-control than I can afford when I'm just trying to get my work done (depletion effect), and whilst the downside of having to spend time empathising with my colleague's style of thinking is blatantly obvious - I mean, who has the time?! - the payoff - "if this stuff even works" seems both ambiguous and way off on the horizon (short-term bias). And anyway, why should I if no one else is (social norming)?

To embed high performance you must design for it
To embed high performance, this is what you must do. Design for the behavioural change.

First, use behavioural economics to understand the reasons inhibiting change, and on the flip side, will facilitate change. In the example above "why should I when no one else is" can instead become "I will because I see others doing it", "If this stuff even works" can instead become "I know what I need to do in small interaction to make a difference overall".

And second, ensure that you have strategies to support both the motivation to change as well as ability to change.

In other words, when the team come back to the workplace all pumped up, when motivation is at its peak, that is the time to get them to commit to new processes and policies, do the hard stuff like moving their office to be closer to their colleagues, schedule meetings they don't like having and so on. Then, when motivation levels drop, the hard changes have already been taken care of so all that you require is the easier tasks. Morning teas, 'thank you' post-it notes...whatever you and your team have designated as 'easy' things should be rolled out so that even if no one really feels like it, you do it anyway and before you know it, you are on the path to high performance.

So by all means, learn from the best and aspire to create a high performance team; after all, the Sydney Swans did it. But don't leave team performance at an intellectual level, assuming team members will change their behaviour on a rational basis because you'll be wasting your money. For a team to perform differently than they have been, your task is one of behavioural change and for that, you need behavioural economics.

Monday, October 15, 2012

How to simplify the experience of using unfamiliar technology? This was the question resolved by Vitamins Design Consultants on behalf of Samsung who were interested in selling more smart phones to older consumers.The answer lay in the packaging.

The roadblock to purchaseWhen you are unfamiliar with a piece of technology - could be a phone, oven, car, DVD player - it can inhibit your willingness to purchase. After all, we all hate feeling like we are stupid, and not feeling capable to use something that other people obviously can is extremely off putting.Removing the mental barrierWith this in mind, Vitamins determined that more could be done to support consumers in the initial stages of setting up and familiarising themselves with their new phone, and that this promise of support would inspire more people to purchase. Out of the BoxIn a brilliant lateral move, Vitamins turned the packaging of the phone - the box it came in - into a storybook of what to do when. As the user flicked through each page they were instructed to complete a stage of the set-up. For instance, the SIM card was embedded in the page with the instruction "This is your SIM card, the heart and soul of your phone, please lift it out". From there, the user was asked to physically slot the phone into the book, like placing a picture in a frame. Each page took the user through the phone's interface - what to press to make a call, how to email and so on. A perfect blend of analogue and digital!Behavioural techniquesI love what Samsung and Vitamins did with their Out of the Box packaging because they used key behavioural insights and techniques;

Overcoming loss aversion - we hate to feel stupid because it reduces our sense of identity. They created something that supported even the most nervous of new users.

Vividness - clear, concise steps meant that there was no confusion as to what to do in which order.

Completion - once started, there was no giving up but also no need to. Simple instructions lead the user through each stage so they ended up with a fully functioning phone and the confidence to use it. Contrast this with technology that you get home, try to set up, get lost in the manual and therefore leave it sitting as a white elephant. My multi-function printer springs to mind as an example.

Lessons for your businessA few blog posts ago I talked about "consumption design'; that part of the product experience that relates to how the product is consumed. Vitamins have demonstrated that the product (the phone) doesn't necessarily need to be changed, but the context in which it is 'consumed' can be. We often limit our thinking about packaging to its functional benefits ie keeping the product free of damage and/or sexy of the shelf, but we should be thinking about how packaging can be behaviourally improved to enhance consumption. Here's to thinking out of the box!For more on Vitamins, visit http://vitaminsdesign.com/projects/out-of-the-box-for-samsung/PS Why not join the People Patterns mailing list? Every month you'll receive a short wrap-up of behavioural tips for business. Click here for the 20 second sign-up.

Tuesday, October 9, 2012

I was at a well known tea retailer the other week, at the register ready to pay. "Would you like to join our loyalty program?" asked the sales assistant.

Here's how it went down...

Assistant: "Would you like to join you loyalty program?"

Me: (exasperated sigh to infer my purse was already groaning under the weight of loyalty program cards). "What's involved?"

Assistant: "You just need to provide some information."

Me: "How much information?"

Assistant: "All of it."

Me: "What's all of it?"

Assistant: "Name, address, phone, email..." (she went on but I'd closed off long ago)

Me: "And what do I get?"

Assistant: "10% off once you reach $500."

Me: "No thanks"

Pretty simply this assistant and/or the store's policy had botched the opportunity to engage me in their program because effort exceeded reward. The effort/reward equation is one I've flagged before as a useful distillation of what you are requiring of your buyer compared with what they receive.

Both effort and reward should be assessed on financial, psychological and social terms as well as time and physical commitment.

In this scenario I was being asked to complete a seemingly endless registration form (time & cognitive effort) for a distant and insignificant payoff (10% after $500). Note the significance on the payoff is scaled in terms of effort. Had I been automatically granted 10% discount on the day for nothing more than an email I would have been rapt.

Here's how it could have gone down (because as my purse attests, I have been known to join such programs);

Assistant: "Would you like to join you loyalty program?"

Me: (exasperated sigh to infer my purse was already groaning under the weight of loyalty program cards). "What's involved?"

Assistant: "I just register your name and email and as a thank you I can take 10% off today's purchases"

Me: "OK sure. My email is..." (immediate benefit, negligible effort)

From there, the company could and should send me a welcome email from which point they can establish a relationship and ask me for more personal information.

It's easy to go wrong when seeking to engage your buyer, so remember to keep effort/reward in balance and you'll see your conversion improve.

Wednesday, October 3, 2012

22 Minutes to a Better Business:

How Behavioural Economics can help you tackle everyday issues

Mystified by the behaviour of your customers? Suppliers? Staff? Don't worry, there is a way to better understand human behaviour and most importantly, influence it to improve your business.

Behavioural Economics explains why we behave the way we do, providing you with a guidebook on how to tackle everyday business issues. And the best bit is that it's fun! You get to understand why you love 4c off a litre petrol dockets and why you haven't refinanced your mortgage.

In a 60 minute presentation packed with practical examples, join me to learn new ways of tackling common business issues such as:

pricing and discounts

product ranging

getting your customers to act

And just to trick you, the seminar is called "22 Minutes to a Better Business" because that's the name of my book of the same name; the seminar itself is 1 hour chock-a-block full of great ideas.

In the meantime, you can check out my blog on the business application of Behavioural Economics via www.peoplepatterns.com.au, where you'll also find my articles for Smatrcompany and MarketingMag.

I guarantee you'll learn lots and enjoy this special seminar. I look forward to seeing you.

Monday, October 1, 2012

I've been in the market for webinar software and came across Anymeeting.com via a search engine. A few elements of their business model appealed as examples of behavioural techniques in play.

Freemium model
Adopting an increasingly popular model for online providers, Anymeeting offers both free and premium options for its online meetings and seminars. The catch with the free option is that you and your participants will see advertising. Given I will be charging for my webinars and therefore don't want advertising interfering with the experience of participants I have decided to ditch the free service in favour of a subscription. A couple of advantages of this tiered system; buyers get to trial the service before committing to payment (building confidence and familiarity) and Anymeeting diversify their revenue model by having paid subscribers and advertisers.

Free version with ads

Upgrade path alleviates pain point

Outcome oriented CTA

We are used to seeing language like 'upgrade to experience benefits...' on sites, but what I liked about Anymeeting was how they expressed it in their call to action (CTA). Rather than 'upgrade now' or 'subscribe', Anymeeting have gone with "Remove ads", a simple, outcome oriented CTA. Aside from removing any doubt as to what would happen by clicking through, this CTA also tapped into the behavioural principle of loss aversion where we are more motivated to avoid pain (poor reaction by paying audience to seeing ads) than seek gain.

Helpfully, they also provided a comparison of what your users see in both free and paid versions of the site.

Ads vs None visual

Anchoring and influencing choice
Anymeeting do their best to upgrade buyers from the time they first visit. Notice how the three program levels are displayed, with the Pro for Meetings package deliberately shaded green to stand out. If they wanted to minimise free option sign-ups they could have taken things further by choosing a more muted CTA for this program (eg dark grey) to shift buyer attention to the paid alternatives.

Program comparison

You'll also note the use of price relativity between the Webinars program ($69.99) and the Meetings option ($17.99) which would encourage take up of the latter.

Payment terms
The thing I didn't like? The payment process for upgrading to a subscription defaulted to a monthly recurrent charge and was not sufficiently clear on how I could stop the payment. Supporting the buyer at the point of payment with this type of information is important to overcome risk aversion. Sure some buyers (like me) will proceed, but dropouts become more likely and undermine the effort its taken to get them to the point of sale. Providing money back guarantees is good, but letting the buyer know how they can escape is powerful too.Lessons for your business
Lessons for your business? Consider a Freemium model to get people started, rethink how your call to action can be expressed as an outcome, take the lead in how you structure the options you sell and finally, cover off last-minute payment nerves with guarantees and explanations.

(As with all my blogs I have written this piece based on my experience as a customer and have not been commissioned by Anymeeting.)

PS Why not join the People Patterns mailing list? Every month you'll receive a short wrap-up of top news from the behavioural sciences and other nuggets of goodness from me. Click here to sign-up.

About Me

Hi! I'm Bri Williams and I run People Patterns, a consultancy specialising in buyer behaviour. I deliver benefits to you by tweaking the interactions you have with your buyers through the application of behavioural science. A marketer and consumer behaviouralist, I've worked across industries for over 15 years, am a specialist contributor to Smartcompany.com.au, facilitator, speaker and author. Contact me at bri@peoplepatterns.com.au to find out how to get your buyers to buy more.

Services available from People Patterns

People Patterns is about businesses getting their buyers to buy more through the application of proven techniques from behavioural sciences such as behavioural economics. By knowing the patterns, you can take the guess work out. Thin of it like "Magician's Secrets finally revealed", but for buyer behaviour!

Contact me via bri@peoplepatterns.com.au or 0408 392 173 to find out about what a difference this new perspective can bring. An obligation free chat could be the best thing you do for your business this year!